Selling pressure on Bitcoin continues, even more so as the world’s largest cryptocurrency slipped another 3% and is now trading below $27,000. At press time, BTC is down 3.13% at a price of $26,795 and a market cap of $519 billion.
Since early 2023, Bitcoin (BTC) has shown a weakened correlation with tech stocks. For the last month of May, Bitcoin announced the first negative monthly close for 2023. On the other hand, the Nasdaq 100 gained more than 8% over the past month on the back of the artificial intelligence hype.
While Bitcoin investors used to enjoy the weaker correlation with tech stocks since the BTC rally, the odds have now turned against them. The 30-day coefficient for Bitcoin and Nasdaq 100 is around 0.2 compared to 0.8 in May 2022. The value of 1 means that both are moving in lockstep. Likewise, the value of -1 means they are moving in the opposite direction.
Courtesy: Bloomberg
Bitcoin and the AI buzz
The rally in the Nasdaq 100 was largely helped by AI enthusiasm, with players like Nvidia Corporation (NASDAQ: NVDA) gaining a whopping 30% over the past month. On the other hand, BTC price failed to make a decisive break above $30,000, instead ending the month of May down 8% with its total gain in 2023 now standing at 64%, which is still significant.
On the other hand, the Nasdaq 100 index is up 30% since the beginning of 2023, and some analysts are wondering how sustainable the gains are considering that few mega-cap companies have supported this rally. Stephane Ouellette, CEO of FRNT Financial Inc., told Bloomberg:
“Correlations in this area have been and remain dynamic as adoption increases and changing investment theses dominate trading windows.”
Some analysts also believe that decoupling Bitcoin from the Nasdaq would be beneficial for the asset over the long term. Additionally, the strong AI narrative in the market has served as a key catalyst for tech stocks to rally and outperform top digital assets like bitcoin and ether.
Bhushan is a FinTech enthusiast and has a keen sense of understanding the financial markets. His interest in economics and finance drew his attention to the emerging markets for blockchain technology and cryptocurrencies. He is constantly in a learning process and motivates himself by passing on the knowledge he has acquired. In his free time, he reads thriller novels and sometimes explores his cooking skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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